Foreign Account Tax Compliance Act

Securities and Exchange Commission (SEC ) Memorandum Circular No. 8 was approved by the Commission En Banc in its meeting held on April 3, 2014. The objective of the circular is to guide non-bank financial institutions (NBFIs) that are covered by Foreign Account Tax Compliance Act (FATCA) regulations.

FATCA was enacted in 2010 by the United States (U. S.) Congress as part of the Hiring Incentives to Restore Employment (HIRE) Act. It was enacted to prevent off-shore tax abuses by U. S. taxpayers. FATCA requires, among others, the on-line registration of foreign financial institutions (FFIs) with the U. S. Internal Revenue Service (IRS) and their reporting to the IRS of information about financial accounts by FFIs in which U. S. taxpayers hold a substantial ownership interest. Under the Act, non-compliance therewith will result to the imposition of a 30 percent withholding tax on payments of U. S.-sourced income to FFIs.

The FFIs referred to in the FATCA pertain to financial institutions which are organized under the laws of a jurisdiction other than the United States of America.

The IRS has included the following FFIs in its non-exclusive list:

* Depository institutions

* Custodial institutions

* Investment entities

* Certain types of insurance companies that have cash value products or annuities

NBFIs that are licensed by the Commission are instructed to conduct the procedures stated in the circular.

Please refer http://www.sec.gov.ph/wp-content/uploads/2015/11/sec-memo-no.-8-s2014.pdf of the full text of SEC Circular No. 8 of the Foreign Account Tax Compliance Act.

What is Internal Revenue Service (IRS)?

Learning about the Internal Revenue Service (IRS) for me is a continuous process to familiarize the system, payment of taxes and its procedures and other related tax matters.

Origin 

The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.

16th Amendment

In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.

In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments.

A New Name

In the 50s, the agency was reorganized to replace a patronage system with career, professional employees. The Bureau of Internal Revenue name was changed to the Internal Revenue Service. Only the IRS commissioner and chief counsel are selected by the president and confirmed by the Senate.
SOURCE: https://www.irs.gov/uac/brief-history-of-irs